UPDATE 2-Evercore Partners swings to Q2 net profit
(Recasts; adds conference call details, analyst comments, share movement)
By Ratul Ray Chaudhuri
BANGALORE, July 24 (Reuters) - Evercore Partners Inc (EVR.N), a top U.S. merger advisory boutique, swung to a second-quarter profit, helped by higher advisory revenue, and said it was looking to capitalize on its restructuring business as more companies struggle through the credit crunch.
The company, which advises on large mergers and acquisitions, is trying to boost the growing restructuring business that helps companies reorganize their finances.
In June, it hired restructuring adviser Daniel Celentano, former head of global financial restructuring at Bear Stearns.
The restructuring business could account for 20 percent to 25 percent of advisory revenue in the long term, Evercore Chief Executive Roger Altman said in a conference call.
He also believes the company's M&A advisory business is "one with long-term growth dynamics," given the pace of globalization and entry of countries like China and India into the global M&A mainstream.
Banc of America Securities analyst Michael Hecht said the company is "better positioned going forward to participate in what we continue to believe will be a solid pace of strategic M&A activity."
Meanwhile, the company wants to boost investment management revenue, which comprises revenue from private equity and public securities business.
In the second quarter investment management revenue fell 77 percent to $1.8 million, and Evercore is looking to bolster the segment by entering the wealth management business in Europe and North America.
Evercore, which wants to seek a balance between its advising practice and investing business, recently acquired a 50 percent stake in London-based asset manager Pan-Asset Capital Management for $14 million.
The company will make more such agreements before the end of this year, Altman said.
"We expect that our expansion will give Evercore a more diversified and a profitable investing platform for 2010," he said.
PROFIT MISSES STREET
For the second quarter, net income was $2.1 million, or 16 cents a share, compared with a loss of $44.2 million, or $4.68 a share, for the year-ago period.
Adjusted pro forma net income was $5.8 million, or 17 cents a share, compared with income of $15.5 million, or 47 cents a share, a year earlier.
Net revenue fell 9 percent to $60.1 million. Advisory revenue rose 2 percent to $57.7 million. Total expenses fell 69 percent.
Analysts on average expected a profit of 20 cents a share, before special items, on revenue of $55.7 million, according to Reuters Estimates.
The company said it took a charge of $1.3 million in the second quarter related to employee severance, facilities costs associated with the closing of its Los Angeles office and certain write-offs.
Evercore expects an additional $1.8 million charge in the third quarter related to the retirement of co-founder and co-Chief Executive Austin Beutner.
The earnings-per-share miss was due to higher compensation expense, BofA analyst Hecht said in his note.
While the stock may respond negatively to the miss at first, the rise in advisory revenue in a tough M&A environment and a decent M&A backlog should help the stock recover throughout the day, Hecht said.
Evercore's M&A backlog stands at about $58 billion across eight deals, including the $42 billion separation of Time Warner Cable (TWC.N) from Time Warner (TWX.N), Hecht said.
The company has advised on $3.3 billion of deals so far in the third quarter, compared with $5.0 billion for all of the second quarter, the analyst noted.
Shares of the New York-based company, which fell more than 5 percent in early trade, recovered to trade up 4 percent at $11.64 in afternoon trade on the New York Stock Exchange. (Editing by Bernard Orr, Himani Sarkar)
